CEF managers' ability to hold onto underpriced illiquid securities in times of market stress represents an advantage over open - end funds that may have to sell to meet unexpected redemptions, says Morningstar's Cara Esser.

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5 Cash-Heavy Funds for the Cautious Investor

FPA CrescentFPACX is a prime example. Steve Romick has an awesome track record with great returns despite copious amounts of caution. The fund has 44% of assets in cash today. With 21 years at the helm, you can trust that Romick knows what he's doing. Romick's a careful stock-picker who will make some unusual investments if he sees an opportunity. The fund has invested in a California mall and even container ships--not companies that own a mall and container ships but the actual things. Those are small parts of the fund that will have only a tiny impact on performance, but it shows how creatively he approaches investing. The fund's top holdings are more conventional value plays such as MicrosoftMSFT, OracleORCL, CVS HealthCVS, and Aon AON.

Wally Weitz lives in Omaha, Nebraska, and he tries to invest like fellow Omahan Warren Buffett. So, it's no surprise that Weitz Partners ValueWPVLX and Weitz Hickory WEHIX are sporting cash positions of 25% and 20%, respectively. Wally Weitz and comanagers Brad Hinton and Andrew Weitz sold into the market rally in the first half of 2014, giving the funds a big pile-o-cash. But they'll reinvest only where they see stocks trading at sizable discounts to their estimates of intrinsic value. They put cash to use wisely after the market dip in 2011 and the market free-fall in 2008.

Third Avenue Real Estate ValueTAREX managers Michael Winer and Jason Wolf hold cash in a category where nearly every fund is fully invested in an attempt to maximize yield. Specifically, cash has risen to 16% recently. They emphasize capital appreciation and preservation over income, however. They are very stingy about spending money on stocks that look pricey, so they let cash build. They also tend to invest in real estate operating companies rather than REITs because such companies can reinvest in property, and they also tend to trade at more-modest valuations than REITs. We give the fund a Morningstar Analyst Rating of Gold.

GoodHavenGOODX is probably the least popular of the cash-builders on this list because management hasn't built up the good will that comes from great long-term returns. Their 19% cash stake is only one of the reasons that Larry Pitkowsky and Keith Trauner have had a slow start. An influx of new money in 2013 led them to invest slowly in what turned out to be one of the all-time great rallies. Cash has come down some since then, but a couple of big holdings, Walter Investment Management WAC and Ocwen Financial OCN, have gotten crushed. Still, we think their process has merit and we rate the fund Bronze. Give yourself extra contrarian points if you buy this fund. Note: They list 19% in cash, but we put it in "other."

Russel Kinnel is Morningstar's director of mutual fund research. He is also the editor of Morningstar FundInvestor, a monthly newsletter dedicated to helping investors pick great mutual funds, build winning portfolios, and monitor their funds for greater gains. (Click here for a free issue). Mr. Kinnel would like to hear from readers, but no financial-planning questions, please. Follow Russel on Twitter: @russkinnel.